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CS Professional · Compliance Management, Audit and Due Diligence · Audit Principles and Techniques

Auditor Meera is concluding the audit of Vindhya Cement Ltd. She has gathered evidence supporting management's assertion on a provision, but a supplier's confirmation contradicts it, and management has also refused to give a requested representation on the matter. Which statement best reflects SA 200 on the nature of audit evidence?

Audit evidence covers information that corroborates assertions and information that contradicts them, and in some cases the absence of information, such as management refusing a requested representation, also constitutes audit evidence. Meera must therefore weigh the supplier's contradiction and the refusal.

  1. AAudit evidence includes information that contradicts assertions, and the absence of information such as a refused representation can itself be audit evidenceCorrect
  2. BOnly information corroborating management's assertions counts as audit evidence
  3. CManagement's refusal is not audit evidence because nothing was obtained
  4. DContradictory information is excluded until it is confirmed by a second source

Explanation

SA 200 says audit evidence comprises both information that supports and corroborates management's assertions and information that contradicts them. In some cases the absence of information, for example management's refusal to give a requested representation, is used by the auditor and so also constitutes audit evidence. Meera must weigh both the contradiction and the refusal.

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